HSBC Says USD Outlook Strengthened by Steady Fed

HSBC strategists Willem Sels and Lucia Ku argue that the US Dollar’s outlook is improving, citing the new Federal Reserve Chair’s hawkish remarks. They believe the Fed will keep interest rates steady through 2026 and 2027, which should reinforce the greenback.

The analysts note that the Fed’s commitment to maintaining current policy rates, combined with a cautious stance, provides a supportive backdrop for the Dollar. This outlook contrasts with expectations of rate cuts in other major economies, potentially widening interest rate differentials in favor of the US.